Bank of America Merrill Lynch Research discusses the USD outlook form the US direct investment perspective and notes overall they still point to further USD strength in the near-term after a phase of s/t consolidation post May FOMC (see here).

"We note here that the US has not only seen relatively stable overall current account deficits in the past few years, but also that the US advantage in terms of strong international investment income flows has remained increasingly robust, stemming in part from stronger returns to direct investments .

These income flows have helped offset the overall trade deficit from goods, supporting our long-term USD forecasts, which still call for additional near-term strength," BofAML argues.